Investors preparing portfolios for a potentially rocky patch in US stocks

Investors are preparing their portfolios for a potentially rocky patch in US stocks, worried that a dramatic rebound in equities may stall amid dimming economic data and rising political uncertainty.

Most money managers are wary of cutting equity exposure too drastically in a market that has rallied more than 40% since late March and stands near all-time highs despite widespread economic devastation and a global coronavirus pandemic.

Still, the continued divergence between stocks and the real economy has worried some investors. US growth took its worst hit on record in the second quarter, while more recent data points to fading